Sadik Khan, the current Mayor of London, is demanding devolved powers which would allow him to control rents right across the capital. In the run-up to the 2020 London mayoral elections this is set to be his cornerstone policy as he fights to attract support. However, there is dismay and distrust at both the demands and the timing of the announcement.
London really would be a market within a market
Many already believe that the London property market is to all intents and purposes a market within a market in the UK. Historically it has recovered far better than the rest of the UK after economic woes. Prices bear little or no resemblance to the rest of the UK when it comes to a multiple of income. Indeed, official figures show that the number of Londoners renting privately has increased from just 11% in 1990 to 26% in 2018.
Controls and free market, do they mix?
Sadik Khan is looking to devolve an array of powers which would allow him to:-
• Establish a universal register of landlords to access valuable data as well as enforce standards
• Establish a London private rent commission to design and implement an effective system of control
• Implement simple rent stabilisation measures such as caps on rent increases while the commission is been created
While these demands will appeal to those struggling to find private accommodation in London there are a number of factors to take into consideration:-
• If this has been an issue for so long, why is there not already a blueprint for a rental commission?
• Can many of the issues London is experiencing be traced back to the right to buy scheme introduced by the Tory government in the 1980s?
• What exactly does “access valuable data” mean with regards to the register of landlords?
London is a unique city, of that there is no doubt, and the authorities have played their role in pushing it head and shoulders above most other cities around the world. This has resulted in an increase in private rental costs. However, let’s not forget the increased average salary for London based employment.
Playing politics with housing
Sadik Khan is just another politician looking to play politics with housing and appeal to the masses when looking for their support. On one hand he is happy to sit in front of investors pushing the appeal of London and the returns. While on the other, he is telling the electorate he will control rents and other costs which have in some parts of London escalated. All this, while introducing more taxes targeting the rich/luxury housing and business.
Berlin and New York
To give some balance to Sadik Khan’s recent comments, Berlin recently introduced a five-year rent freeze allowing the control of rental charges. Rents in various parts of New York City are also directly controlled by the authorities. There have been recent changes in Scotland with the introduction of “rent pressure zones” which would control rent increases to no more than inflation. However, so far England and Wales have refused to adopt any form of rental controls, instead opting for a free-market approach.
The ongoing rental increases in London are not a new phenomenon and there have been calls for change for over a decade. The electorate and investors are right to be wary of the timing, ahead of next year’s mayoral elections, and ask questions as to why nothing has been done so far. The creation of various commissions has also prompted accusations that the subject is “being kicked into the long grass” and when the devolved power demands are refused by the Tory government, another political spat will ensue. Quite how rental controls would help to attract new investment to London housing in the future is an issue for another day.